Evaluation of base-stock policies in multiechelon inventory systems with state-dependent demands. Part II: State-dependent depot policies

The authors consider a two-echelon inventory system where the exogenous demands occur only at the retailer locations, and the demand rates are functions of an underlying continuous-time Markov chain. Thus underlying process may represent, for example, general economic conditions, the number of active users in the system, et cetera. Each retailer location follows a base-stock policy that is independent of the process. However, the warehouse (central depot) follows a state-dependent base-stock policy. The authors develop a procedure to compute the exact steady-state customer-delay distribution for both the warehouse and the retailer locations.